How do you minimize risks when EURUSD moves 100 pips up and back down in 2 hours?

And this happens quite often. [caption id="attachment_5526" align="aligncenter" width="580" caption="EURUSD, 5 min"][/caption] There are a few choices to minimize your risks in times like these:

  1. Stay on the sideline until the dust settled.
  2. Target higher time frames with larger stops and smaller positions.
  3. Partner up with someone from another timezone.
  4. Set a trailing stop.
  5. Set alerts to wake you up on extraordinary events.
  6. Use a position management bot.

I opted for #6. What about you? The picture is worse in equities as you are locked in your positions overnight. [caption id="attachment_5527" align="aligncenter" width="580" caption="S&P500 ETF"][/caption]

Posted 24 June 2011 in forex.

Porting JForex QTD to Metatrader 4

I just finished porting Quantised Trading Desk to Metatrader 4. So that I can make use of my dormant trading account at Oanda. Seeing that Oanda has enabled use of Metatrader 4, I thought I might give them a second try. I've always preferred to have more than one active trading accounts to serve as a backup and comparison. I settled on Questrade and TD Waterhouse for stocks and options, after hopping around brokerages for years. And I've been using Dukascopy to trade forex after much contention. This is a good chance to diversify as I don't want to pigeonhole myself into one broker and one platform. The move to Metatrader 4 up until this point only took a couple of weeks as opposed to JForex version's year-long development time. This is because the underlying QTD system dynamics and algorithms were ironed out in JForex. I don't think I can finish QTD if I only had MQL4 at my disposal. Debugging and extending MQL4 scripts are a nightmare to say the least. I am so glad that I moved away from these "easy" languages. For the MQL4 version of QTD, I am merely doing a direct source code port from JForex to MQL4. MQL4, if anything else, is a very easy scripting language. I just taped out an alpha version of MT4 QTD this weekend as it is up to a stage where it is functional. However, porting QTD to MQL4 isn't without its difficulties. For one, MQL4 is tailored for simple trading with technical analysis indicators. If price move above moving average, go long, for example. Whereas QTD rely on statistics and numerical methods in its trading algorithm. As such, I had to go back to basics and define all of my numerical methods from the fundamentals. I am now moving on to do forward testing on the MT4 QTD to ensure that both the JForex and the MT4 versions work similarly. I can't wait til I can run QTD on Dukascopy and Oanda simultaneously.

Bearish USDJPY on 19th week of 2011

I am going bearish on USDJPY this week using my QTD system. No position is opened at this point. I am merely entering my sentiment into the system to trade for me. Figure 1 is a daily chart of USDJPY. Notice it's lack of life despite the USD making headlines last week. Figure 2 shows the move with a US dollar index, USDX, daily chart. Furthermore, according to the order book on USDJPY, there are massive bullish positions in the red (at a loss) which make this pair ripe for some bull squeeze. I am going short on NZDUSD as a hedge on this move. It is my favourite long USD pair these days. [caption id="attachment_5405" align="aligncenter" width="580" caption="USDJPY, daily"][][][/caption] [caption id="attachment_5406" align="aligncenter" width="580" caption="U.S. dollar index futures, USDX"][][][/caption]

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Posted 08 May 2011 in forex.

First QTD trade, 0.19% gain long EURGBP

My semi-automated trading system, Quantised Trading Desk, closed its first trade this week. I was bullish EURGBP and USDJPY, and bearish NZDUSD as per the previous discussions. The QTD system saved me from the premature calls in both USDJPY and NZDUSD by not making any trade this week. That, in and of itself, has made me very happy with QTD's first week of live trading. Particular in light of how fierce that USDJPY down move has been. As a bonus, QTD entered a long position in EURGBP for a small 0.19% gain as illustrated below. My parameter were a maximum of 0.25% risk per position. The gain could have been better if it weren't for that 61% retracement. Not that I'm complaining as I haven't even looked at the market this past couple of days while the system is trading for me. USDJPY touched my threshold support price 80.70, my bullish sentiment needs to be reevaluated. NZDUSD just cracked a higher high (marginally though), so I'm easing on the bear button for now. EURGBP is testing some resistance to, so I'm not so eager to dive in again. Overall, I've been 2/3 wrong. I've told you before that I'm very bad at timing the market. That's why I developed QTD to trade for me. Seeing that it's a long weekend, and I'll be way from town, I'm just going to shut down my remote trade server in London until next week when I can have some time to re-do my analysis. [caption id="attachment_5361" align="aligncenter" width="580" caption="EURGBP, hourly"][][][/caption]


Posted 21 April 2011 in forex.

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